Lean supply chain, Pt. 2: harmonizing customer service with manufacturing
- May 14th, 2015
- By: Scott Robinson
Every manufacturer strives to cultivate efficiently – yet responsiveness to customers is equally important. ERP expert Jakob Bjorklund has pointed out that these two imperatives can often be in conflict.
It is common, Bjorklund noted, for manufacturers to produce in very large quantities, which, despite creating the challenge of storing surplus product, can generate efficiencies in raw materials purchases, optimum performance from manufacturing hardware, getting the most from personnel, and so on, yielding the lowest-possible cost-per-unit on product. However, this kind of dedication to efficiency can cause scheduling of manufacturing to synchronize with supplier schedules, rather than consumer demand.
Decoupling from consumer demand, he said, can cause manufacturing to respond poorly to periodic fluctuations in consumer needs; in effect, the goals of manufacturing operations can come into direct conflict with the goals of the sales organization. Commitment to high-volume production can cause availability of some products to slip, due to inventory shortages tied to the production schedule.
Bjorklund proposed that compromise is the key to reconciliation in this scenario, and that the benefits to customers outweigh the cost of supporting some manufacturing inefficiency.
“Going forward, manufacturing would not be making unilateral decisions about batch sizes and production schedules, circumventing their natural tendency to focus on manufacturing efficiency,” he said. “Instead, they would now be obliged to produce only enough to cover a certain period of time based on the sales projection. That means that every product will now be produced more frequently and in smaller batches.
“To encourage this behavior, other metrics and KPI’s can be introduced that are more holistic and based on customer service levels and inventory turns, rather than just production output. The higher the speed through the supply chain, the higher the inventory turns and the less capital tied up in inventory at any given time. At the same time, the faster the raw materials move through the supply chain, the less obsolescence you have and less expired materials you have.”